Banks finished providing relief required by settlement

Published: Wednesday, March 19, 2014 at 1:00 a.m.

Last Modified: Tuesday, March 18, 2014 at 8:48 p.m.

Five giant lenders have fulfilled their obligations to provide financial relief to distressed homeowners under a landmark $25 billion National Mortgage Settlement.

Strapped Florida homeowners received more than $9.2 billion in relief, primarily through short sales, forgiven debt and loan modifications.

Nearly 120,000 mortgage borrowers benefited from some form of financial assistance, for an average of $77,066.

In a final report this week, settlement monitor Joseph A. Smith Jr. said the five banks provided more than $50 billion in gross relief nationwide, which translated into $20.7 billion in credits under the settlement's formula.

Most of the relief came in the form of debt reduction and refinancings to resolve claims of mortgage and foreclosure abuses -- including the infamous "robo-signing" scandal -- during the financial crisis that began in 2008.

"More than 600,000 families received some form of relief," Smith said.

Florida Attorney General Pam Bondi said that 73,000 foreclosed borrowers in Florida also shared in $107 million in payments. In all, the $9.2 billion in bank-reported relief for Florida homeowners exceeded the original estimate by $800 million, Bondi said. That amount accounted for 18 percent of the national total and was second only to California.

Among other things, the settlement requires the banks to adhere to enhanced servicing standards for 3 1/2 years.

Bank of America, Citibank, JPMorgan Chase, Wells Fargo and the ResCap parties agreed to the settlement in 2012 with the federal government and attorneys general in 49 states. The ResCap parties include Ally Bank, the former GMAC.

Those lenders were key players in the robo-signing of foreclosure documents -- processing foreclosures without verifying documents -- and other abuses during the financial crisis, when home values plunged and millions of people lost their homes.

Some have criticized the settlement because many of the borrowers wound up selling their homes through short sales -- that the banks may have approved anyway -- rather than receiving reductions in their mortgages, which would have helped them remain in their homes.

Nearly 32,000 Florida homeowners received $3.48 billion in breaks through short sales, the largest dollar amount of relief. Another 50,000 Floridians received $3.4 billion as a result of second-mortgage debt being wiped out, though in many cases that debt would have been uncollectible.

Meanwhile, 10,900 Florida homeowners received $1.43 billion in reductions of first-mortgage principal, which experts say is the key to keeping people in their homes.

<p>Five giant lenders have fulfilled their obligations to provide financial relief to distressed homeowners under a landmark $25 billion National Mortgage Settlement.</p><p>Strapped Florida homeowners received more than $9.2 billion in relief, primarily through short sales, forgiven debt and loan modifications.</p><p>Nearly 120,000 mortgage borrowers benefited from some form of financial assistance, for an average of $77,066.</p><p>In a final report this week, settlement monitor Joseph A. Smith Jr. said the five banks provided more than $50 billion in gross relief nationwide, which translated into $20.7 billion in credits under the settlement's formula.</p><p>Most of the relief came in the form of debt reduction and refinancings to resolve claims of mortgage and foreclosure abuses -- including the infamous "robo-signing" scandal -- during the financial crisis that began in 2008.</p><p>"More than 600,000 families received some form of relief," Smith said.</p><p>Florida Attorney General Pam Bondi said that 73,000 foreclosed borrowers in Florida also shared in $107 million in payments. In all, the $9.2 billion in bank-reported relief for Florida homeowners exceeded the original estimate by $800 million, Bondi said. That amount accounted for 18 percent of the national total and was second only to California.</p><p>Among other things, the settlement requires the banks to adhere to enhanced servicing standards for 3 1/2 years.</p><p>Bank of America, Citibank, JPMorgan Chase, Wells Fargo and the ResCap parties agreed to the settlement in 2012 with the federal government and attorneys general in 49 states. The ResCap parties include Ally Bank, the former GMAC.</p><p>Those lenders were key players in the robo-signing of foreclosure documents -- processing foreclosures without verifying documents -- and other abuses during the financial crisis, when home values plunged and millions of people lost their homes.</p><p>Some have criticized the settlement because many of the borrowers wound up selling their homes through short sales -- that the banks may have approved anyway -- rather than receiving reductions in their mortgages, which would have helped them remain in their homes.</p><p>Nearly 32,000 Florida homeowners received $3.48 billion in breaks through short sales, the largest dollar amount of relief. Another 50,000 Floridians received $3.4 billion as a result of second-mortgage debt being wiped out, though in many cases that debt would have been uncollectible.</p><p>Meanwhile, 10,900 Florida homeowners received $1.43 billion in reductions of first-mortgage principal, which experts say is the key to keeping people in their homes.</p><p>In Florida, Bank of America provided $4.95 billion in relief; Chase, $2.2 billion; Wells Fargo, $1.4 billion; Citi, $520 million; and ResCap, $91 million.</p><p>In his final report, Smith noted that 37 percent of the total relief came in the form of first-mortgage forgiveness, and 15 percent in second-lien forgiveness.</p><p>Some 17 percent of the total represented refinancings via rate-reduction assistance to homeowners who did not qualify for regular refinancing programs.</p><p>A final 31 percent resulted from forgiveness of amounts in forbearance, waivers of balances due on mortgages after short sales and cash payments.</p>